Are you wondering about the difference between the Inventory Control System and Inventory Management System?
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Inventory Control and Inventory Management may seem similar in a lot of ways! But in reality, both have their individual space. Where Inventory Control Management System is all about controlling and handling the On-Hand stock; Inventory Management System deals on a broader prospect of managing and maintaining stock, timely availability of products, appropriate quantity, and analyze the future demands.
Furthermore, we will discuss the difference between inventory control management system and inventory management, benefits of both the systems, types of inventory control and inventory management systems, and a necessity for a company. To begin with, let’s understand the difference between the Inventory Control Management System and Inventory Management System. As said earlier, the Inventory Control Management System deals with In-house warehouse activities and Inventory Management deals with managing the warehouse and stock. Although they may seem similar, they do work on two very different aspects.
Importance of a Good Inventory Control System
- How good it seems to have complete Accountability of Goods – Inventory Control Management System helps you know where your product is and how to find it in the warehouse. Through accountability, you are aware of the exact location of the product, size, quantity, and remaining inventory. This speeds up your process, saves time and prepares a pick list at the earliest. Thus, when there are nearly 1000s of products to pick from your warehouse, the Inventory Control Management system will help you organize your work.
- Liberty to Track the InFlow and OutFlow of Goods – As the company makes numerous sales in a day, it is important to know that all the orders are fulfilled. Also, the dispatched orders are accurate and going to the right buyer. Moreover, if a product is returned, Inventory Control Management tracks and feeds data for every incoming and outgoing product. Thus, all the product movements are tracked and recorded through the Inventory Control Management System.
- Tired of Overstocking and Understocking – It is always a bad idea to keep your warehouse overloaded. This way, you not only have deadstock but also an unorganized warehouse. This makes it very difficult to manage the space efficiently. Many companies face trouble in properly stocking their warehouse and end up completely exhausted while placing a new order. Through Inventory Control Management System, it gets easier to understand the current stock figures and accordingly place orders. In other words, it minimizes the scope of overstocking and understocking. This saves the investment costs and the finances are not blocked due to real-time updates.
- Optimum utilization of Warehouse Space – Accurate inventory counts help with the proper management of the warehouse. In other words, by reducing overstocking, the warehouse can be utilized in a much efficient manner.
What does the Inventory Management System do?
- Forecast Requirements – On the contrary to Inventory Control Management system calculates the current stock data; Inventory Management collects information to predict product requirements. Moreover, by using Just-in-Time theory the inventory is stocked as per requirement. Thus, to avoid overstocking and increasing the efficiency of the company.
- Work on Stock Replenishment: Inventory Management streamlines the warehouse and business activities. It ensures the warehouse is having adequate products, moreover, utilizes the products efficiently. It determines which product to order and when to order, the right vendor and the most competitive rates.
- Automate Inventory with Real-time Changes – Let’s see how automation is your warehouse. Starting from the most basic automation – Barcoding products – The labels capture the product details, thus, inventory is calculated.
- Software and Hardware Automation – An inventory cannot be calculated without complete information. Thus, through the warehouse management system, the inventory flow and orders are recorded.
- Track Incoming and Outgoing Inventory – Moreover with automation, manual labor is reduced. Also, the product details can be registered in the system effortlessly.
Amazon and Nike have one of the finest warehouse automation systems. Amazon has one of the largest storage units and operates on complete automation. They use a warehouse management system to track incoming and outgoing products and track every shelved item. Also, Nike have automated their software and hardware with their 2 Million sq.ft distribution unit to monitor their inventories.
- Integrate your Workplace – As discussed earlier, Inventory Management works on a broader aspect. Through this, you can easily integrate all your marketplaces through a single point of contact. Moreover, with all the channels integrated together, you can easily modify the inventory and the same will be displayed throughout the channels.
Types of Inventory Control System
There are different types of inventory control systems based on a company’s requirements. Let’s compare the various types of inventory control systems and understand their benefits.
How to decide?
Too many options and not yet able to decide. Ask yourselves these questions?
Do you have to maintain a large number of inventories?
What kind of business do you have – online stores or brick and mortar?
Are you running a big scale business or a small scale business?
What kind of investment are you planning to roll out?
Most of the queries will be answered immediately; thus, giving you a better idea of the kind of inventory system that is rightly suited to your objectives.
7T of the Techniques of Inventory Management System
Also, in the Inventory Management System, there are various techniques that can be considered based on company requirements. Let’s understand briefly how they are effective.
- ABC Analysis – As the name suggests, inventory bifurcation occurs in three categories A – Most Expensive, B – Moderate Expensive, and C – Least Expensive
- Just in Time (JIT) Method – By keeping only the needful products required during production, the company does not overstock products. This way, they save on inventory and storage costs.
- Material Requirements Planning (MRP) Method – Each product has a value based on the sales forecast. This way, the company releases orders through the MRP method.
- Economic Order Quantity (EOQ) Method – Through this model, place an order only when the inventory has reached a threshold level.
- Minimum Safety Stocks – A minimum inventory threshold that a company maintains to avoid going out-of-stock.
- Vital Essential and Desirable (VED) Analysis – This model controls and maintains the spare parts of the inventory.
- Fast, Slow, and Non-Moving (FSN) Method – This method tracks the most used products and least used products in the inventory.
Too much to grasp and too little time?
Let’s see some real-life examples and statistics and understand how Inventory Control Management system and Inventory Management have helped companies:
- According to a Wasp Business Report, 2017 early 43% of Small Businesses do not track their inventory or use manual tracking.
- Also, nearly 42% of small businesses plan to increase IT spending in 2017.
- Moreover, a report of a loss of $461.9 Billion per annum; according to the 2018 research report of IHL. This happens due to Overstocking and $634.1 Billion due to Out-of-stock in the eCommerce industry.
- Nike hit a rough patch in 2016, and the CEO of Nike has commented, Less is More. Further adding, they are concentrating on the customer preferences. And will reduce the clutter accordingly. This way, Nike Inventory Management System made a few changes to serve better to their customers.
Popular store ‘Ralph Lauren’ – Their inventory system was highly unorganized. Even after high sales and revenues, they earned only 50% as profits for two consecutive years. During this time, Mr. Stefan Larsson, the new CEO of Ralph Lauren stepped in to replace Mr. Lauren. After the new CEO, the company observed there was a credible growth in the profits. Moreover, his first steps as a CEO were to streamline and organize the inventory. Also, he worked on the inventory control management system to achieve the desired goals. Not to mention, within 4 years of inventory control management system, the profits maximized exponentially.
In conclusion, for any business – big or small, the biggest threat is the poor management of inventory. This includes overstocking, understocking, and out-of-stock. It is very important to select the most suitable inventory control management system which can organize and control the stock. Thus, through this, you can avoid huge costs and mobilize revenue effectively. Smart businesses plan ahead of their current situation and search for an organized technical solution. While you search, Orderhive can provide inventory control solutions based on your requirements. Moreover, helps track your goods, display stock in the warehouse, and utilize the warehouse optimally.